STATE  OF  NEW  YORK 

DEPARTMENT  OF  AGRICULTURE 


CALVIN  J.  HUSON,  Commissioner 


UMASS/AMHERST 


aiEDtbODLaSbEl? 


Circular  94 


Manual  on  Cooperation 


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ALBANY 

T.  B.  LYON  COMPANY,  PRINTERS 

1914 


LIBRARY 


OF  THE 


MASSACHUSETTS 

AGRICULTURAL 

COLLEGE 


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1491 


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Digitized  by  the  Internet  Archive 

in  2010  with  funding  from 

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http://www.archive.org/details/manualoncooperat1919newy 


STATE  OF  NEW  YORK 

DEPARTMENT  OF  AGRICULTURE 

CALVIN  J.  HUSON,  Commissioner 


Circular  94 


Manual  on  Cooperation 


ALBANY 

J.  B.  LYON  COMPANY,  PRINTERS 

1914 


^  2)0,  ^  3  ^ 

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INTRODUCTION 

There  is  little  doubt  on  the  part  of  the  producer  or  consumer 
that  some  form  of  cooperation  must  soon  be  adopted  to  reduce  the 
present  waste  and  cost  of  food  distribution.  Just  what  cooperation 
is  or  just  which  form  of  it  is  most  adaptable  to  our  needs  in  'New 
York  State  does  not  appear  to  be  well  understood  and  this  circular 
is  published  with  the  hope  of  making  the  meaning  of  cooperation 
as  clear  as  possible  and  to  show  some  practical  forms  which  are 
meeting  with  great  success. 

[3] 


A  PRIMER  OF  COOPERATION 

By  M.  W.  Cole 

Cooperation  is  tlie  working  together  for  any  desirable  end. 

Cooperation  is  not  a  new  idea.  It  has  been  successfully  ap- 
plied to  every  forai  of  business  and  life.  Our  school  system 
and  our  government  itself  are  in  reality  large  cooperative  enter- 
prises. 

Cooperation  in  business  means  any  joint  imdertaking  where 
the  profits  from  the  undertaking  are  shared  by  all  engaged  in  it. 

Cooperation  is  not  a  joint  stock  enterprise  where  the  profits  go 
to  the  stockholders  only. 

A  cooperative  company  may  engage  in  any  kind  of  business  but 
no  one  may  have  more  than  one  vote  in  directing  its  business  and 
no  stockholder  may  receive  more  than  6  per  cent,  on  the  money 
invested  in  such  stock. 

A  cooperative  company  divides  the  profits  of  its  business,  after 
a  resen^e  fund  has  been  created,  with  all  who  have  helped  to 
make  that  b;usiness. 

A  cooperative  company  may  become  incorporated  in  New  York 
State  with  only  $500  capital  and  only  five  members. 

A  cooperative  company  does  not  make  its  members  liable  for 
a  dollar  more  than  the  amount  of  stock  each  one  holds. 

A  cooperative  company  is  profitable  to  the  producer  —  because: 
1'.  It  enables  him  to  buy  his  farm  supplies  at  wholesale  and  it 
give®  him  and  his  neighbors  a  standing  and  a  credit  in  the  business 
world  which  few  individuals  ever  attain  alone.  One  man  can  not 
lift  a  ton  without  some  machinery,  but  twenty  men  can  do  it 
easily  by  lifting  together.  The  purchasing  power  of  twenty  men 
used  at  one  time  and  on  one  article  is  many  times  greater  than 
the  power  of  one  man  at  twenty  times  or  on  twenty  articles. 
Farmers  are  manufacturers.  They  should  buy  all  raw  materials 
(seeds,  fertilizers,  machinery,  etc.),  at  wholesale.  Until  they 
cooperate  and  form  organizations  they  buy  at  retail  and'  sell  at 
wholesale.     'No  other  business  could  live  a  year  if  it  did  this. 

2.  It  enables,  the  producer  to  sell  his  product  at  a  better  or  a 
more  stable  price.     The  average  farmer  sells  his  produce  on  the 

[4] 


local  market  for  what  he  can  get.  He  has  neither  reliable  informa- 
tion or  necessary  contidence  in  other  markets.  Through  a  business 
organization  he  may  learn  true  market  conditions  and  by 
grading  and  standardizing  his  produce  through  organization  he 
may  command  profitable  prices  as  well  as  earn  and  keep  business 
confidence. 

3.  It  makes  better  fanns  and  better  farmers.  Better  farms  and 
better  farmers  are  possible  only  as  the  business  of  the  farm  is 
made  more  profitable,  and  that  can  be  done  onh^  by  adopting 
modern  business  methods. 

A  cooperative  company  is  profitable  to  the  consumer  —  because  : 
1.  It  enables  him  to  buy  household  supplies  at  a  considerable  sav- 
ing below  the  local  retail  price  and  it  makes  possible  a  fairly  con- 
stant supply  of  perishable  food  at  fair  prices  by  creating  a  constant 
and  educated  demand.  2.  It  makes  a  better  market  for  the  indi- 
vidual producer  and  by  education  of  its  members  it  makes  them 
familiar  with  the  costs  of  distribution  which  each  member  shares 
and  to  lovrer  w^hich  each  member  strives,  thereby  increasing  his 
individual  profit. 

3.  It  insures  the  quality  of  the  goods  handled.  The  quality  of 
the  goods  the  consumer  gets  depends  now  on  the  character  of  the 
merchant  and  the  amount  of  profit  he  demands.  In  an  incorpo- 
rated company  this  quality  depends  solely  on  the  demands  and 
tastes  of  its  members. 

Bid:  Xo  cooperative  company  can  succeed  unless  it  has  a  loyal 
membership.  In  the  ordinary  stock  company  the  cooperation  is 
with  money  only.  In  the  cooperative  company  there  must  be  a 
spirit  of  loyalty  as  well  as  money.  All  the  members  of  a  coopera- 
tive company  must  be  more  loyal  than  the  stockholders  of  an 
ordinary  stock  company.  Loj^alty  is  more  necessary  than  capital. 
Ten  members  who  will  get  in  and  stick  to  a  cooperative  company 
are  better  than  two  hundred  who  get  in  and  kick.  If  the  manage- 
ment of  a  cooperative  company  does  not  suit  the  members  they 
should  change  the  management  and  not  leave  the  company. 

Hov:  to  Begin :  Nothing  ever  starts  itself.  Some  one  must  have 
the  push  or  the  pull  to  get  a  few  people  together.  Then  arrange 
for  a  meeting  at  some  convenient  time  and  place.  Ask  the  Bureau 
of  Cooperation  in  the  Department  of  Agriculture  at  Albany  to 


6 

send  an  organizer  to  attend  tins  meeting.  Have  every  one  under- 
stand the  purpose  and  the  benefits  of  an  organization.  Ask  every 
one  present  to  tsike  stock.  When  five  hundred  dollars  are  sub- 
scribed file  a  certificate  of  incorpoTation  with  the  Secretary  of 
State.    This  will  cost  ten  dollars.    Then  start  doing  business. 

Every  association  however  will  have  local  problems  to  consider 
and  many  of  the  details  of  both  organization  and  of  the  conduct  of 
the  business  will  have  to  be  adapted  to  the  needs  of  each  new 
company. 

Why  An  Iistcoepoeated  Stock  Company 

There  seems  to  be  a  general  misunderstanding  of  the  reasons 
for  forming  a  stock  company  and  becoming  incorporated.  People 
generally  feel  that  incorporation  in  some  mysterious  way  means 
increased  business  risk. 

Many  granges  in  this  state  are  doing  a  buying  business  among 
their  members  and  many  farmers  in  various  localities  have  various 
social  organizations  through  which  they  buy  many  of  their  sup- 
plies. They  seem  to  fear,  however,  the  organization  of  a  corpora- 
tion and  are  quite  slow  to  take  up  this  form  of  business  activity. 

The  cooperative  stock  corporation  and  its  incorporation  is  neces- 
sary and  much  safer  than  the  loose  membership  association.  It 
gives  a  business  standing  and  business  credit  and  it  relieves  the 
stockholders,  the  directors  and  the  committees  of  any  personal 
liability.  A  membership  society  or  a  membership  association 
which  buys  or  sells  supplies  through  a  committee  of  its  members 
looks  safe  but  it  is  not.  The  members  of  such  a  committee  if 
they  make  orders  for  goods  or  make  a  contract  for  sale  of  produce 
are  each  individually  responsible.  In  the  incorporated  stock 
company  they  would  only  be  liable  to  the  extent  of  their  stock 
holdings. 


Bureau  of  Cooperation  —  Board  of  Agriculture, 

Schenectady,  :N^.  Y.,  Jan.  20,  1914. 

Dear  Sir. —  I  delayed  sending  yon  desired  statement  because  of 
the  fact  that  our  balance  sheet  is  not  yet  available.  However  I 
dug  up  these  few  figures  that  are  given;  they  are  absolutely  cor- 
rect. I  will  make  sure  of  your  receiving  a  copy  of  our  official 
returns,  when  they  are  endorsed  by  our  members.  The  quarterly 
meeting  is  held  next  Wednesday  night.  If  you  should  desire  to 
visit  any  of  our  meetings  or  wish  to  have  any  information  on  any 
point  please  let  us  know.  Any  kindred  group  is  welcome  to  the 
same.  Please  overlook  any  errors  in  statement  in  the  way  of 
spelling,  ete.  The  bulk  of  our  directors  are  shop-workers  by  day, 
though  directors  (or  grocery  clerks)  by  night. 

Yours  for  cooperation, 
(Signed)     John  C.  Bellingham, 

Secretary  Educational  Committee. 

THE    CITIZENS'    COOPERATIVE    SUPPLY    COMPANY, 

SCHENECTADY 

By  J.  C.  Beleingham 

The  cooperative  movement  found  expression  in  Schenectady 
by  the  starting  of  the  Citizens  Cooperative  Supply  Company.  The 
impulse  can  perhaps  be  found  in  the  massing  together  of  workers 
in  the  vast  plants  located  in  this  city,  where  a  high  degree  of  skill 
is  demanded.  -Cooperation  and  inter-exchange  of  ideas  being  a 
matter  of  daily  routine  it  was  natural  that  those  methods  be  used 
in  the  homes  of  workers  for  the  solution  of  difficulties  common 
to  the  working  class.  Added  to  this,  a  certain  amount  of  Idealism 
not  within  the  scope  of  this  article,  and  we  find  fertile  ground 
for  the  founding  of  a  cooperative  association. 

The  preliminary  meetings  were  called  and  a  small  group  of 
fifteen  women  and  men  responded.  Investigation  was  made  of  all 
ventures  of  this  kind  that  had  been  launched  in  the  United  States, 
if  successful,  their  methods ;  if  unsuccessful,  why.    A  set  of  rules 

[7] 


8 

were  drafted  based  on  the  knowledge  gained  and  finally  they 
agreed  to  incorporate  nnder  the  laws  of  the  State  of  IN^ew  York. 
A  charter  was  obtained  December,  1912,  nine  members  being  the 
number  with  one  or  more  shares  paid  up.  The  rules  adopted  place 
the  value  of  the  stock  at  five  dollars  per  share,  payable  at  fifty 
cents  down  and  twenty-five  cents  per  week,  also  an  entry  fee  of 
fifty  cents  per  member  is  charged.  A  limited  number  of  shares 
can  be  held  by  each  member  and  ''  one  member,  one  vote  "  pre- 
vents monopolistic  control.  This  rule  also  provides  for  the  lower 
paid  worker  coming  in,  and  encourages  him  to  take  an  active  part 
in  the  affairs  of  the  company. 

The  rules  and  by-laws  are  largely  modeled  on  the  '^  Eochdale 
Plan,"  so  called  from  the  pioneers  of  the  British  Cooperative, 
their  success  being  notable.  The  Board  of  Directors  are  elected 
by  the  general  meeting  of  the  members,  the  term  of  service  being 
one  year.  An  inventory  is  taken  every  three  months,  a  balance 
sheet  made,  and  audited,  auditors  to  be  others  than  directors, 
profits  paid  in  interest  on  stock  capital,  and  dividend  on  pur- 
chases made,  and  the  whole  account  is  turned  over  to  the  quarterly 
general  meeting  for  acceptance  or  rejection. 

The  group  did  not  grow  very  fast,  investigation  was  the  key- 
note of  the  movement,  and  intending  members  wanted  to  see 
''  something  doing  "  before  they  invested.  It  is  significant  that  the 
first  money  spent  was  for  a  supply  of  pamphlets  containing  a  re- 
print of  an  article  on  cooperation  that  had  appeared  in  a  mag- 
azine. This  w^as  distributed  in  large  numbers.  They  also  sent 
to  the  British  Cooperative  ^Vholesale  Society  for  a  book  on 
cooperative  bookkeeping.  A  solid  foundation  was  sought  for  and 
^'  Education  "  was  chosen  as  such. 

On  May  10,  1913,  the  membership  was  fifty  and  it  was  resolved 
to  make  a  start  in  business  and  100  pounds  of  high  grade  coffee 
and  three  chests  of  tea  were  bought.  This  was  retailed  at  one 
of  the  director's  houses,  but  room  was  needed  so  on  May  31 
we  moved  to  a  room  in  an  office  building  on  the  third  floor. 
A  small  stock  of  nonperishable  groceries  was  added.  The  store 
was  fitted  with  shelving  and  counters  by  the  members,  who  also 
served  as  clerks  during  the  time  it  was  open  in  the  evenings  and 
Saturday  afternoons.     At  this  time  it  was 'decided  to  continue 


9 

-along  conservative  lines,  only  stocking  small  quantities  of  goods 
when  the  members  had  shown  they  wanted  them.  This  insures 
a  fresh  stock.  A  decided  benefit  in  the  voluntary  service  was 
that  each  clerk  was  able  to  tell  intending  members  of  the  advan- 
tages of  cooperation. 

It  was  resolved  to  pass  the  first  quarterly  balance  sheet  without 
dividend  as  we  had  not  been  three  months  in  the  retail  business. 
The  first  week's  sales  had  been  $10.20,  first  month^s  $92.65.  Sep- 
tember 30,  the  end  of  financial  quarter,  show^ed  a  business  done 
from  the  first  of  $1,081.97,  a  stock  of  groceries  in  hand  of  $432.61, 
a  balance  in  the  bank  of  $188.34.  The  membership  now  stood 
at  133,  and  a  dividend  of  4^  per  cent,  on  purchases,  with  interest 
at  the  rate  of  3%  per  cent,  per  annum  on  stock  capital  was  de- 
clared. During  this  quarter  a  delivery  system  was  started,  orders 
to  the  value  of  one  dollar  and  over  being  sent  out,  Saturdays  only. 

Membership  and  business  grew  and  Labor  Day  saw  the  store 
moved  to  a  place  on  Liberty  Street.  The  voluntary  service  was 
continued  for  a  time  but  on  December  1  a  wo'man  clerk  Avas 
hired  to  keep  the  store  open  the  whole  day.  A  week's  trial  was 
sufficient  to  show  the  step  was  justified,  the  directors  having  to 
give  more  time  than  ever  to  the  fast  growing  trade.  Three  vans 
were  required  to  deliver  the  goods  Saturdays  and  are  proving 
inadequate.  Perhaps  the  best  idea  of  the  growth  can  be  "secured 
from  the  balance  sheet  for  the  quarter  ending  December  31,  1913 : 

Membership 221 

Sales $2,715.48 

Stock  in  hand 977.62 

Balance  in  bank 199.60 

This  is  after  paying  off  completely  the  cost  of  store  and  office 
fixtures,  valued  at  over  $100. 

The  directors  have  run  a  strictly  cash  business.  The  largest 
stockholder  in  the  company  is  a  member  with  six  shares.  Xot  a 
cent  of  money  has  been  borrowed  at  any  time.  This  has  been 
accomplished  in  the  face  of  an  acute  industrial  depression.  The 
cooperative  idea  is  firmly  rooted  and  its  believers  look  forward 
to  the  problems  of  the  future  with  the  faith  that  carried  it  through 
the  past. 


ONE  COOPERATIVE  SUCCESS 

By  L.  C.  Tuckermax 

In  March,  1912,  Mr.  C.  E.  Thurston,  of  ^New  York,  and  Mr. 
W.  Y.  Velie,  of  Marlborough,  called  npon  a  number  of  farmers 
in  the  district  from  Xewburgh  to  Highland  to  discuss  a  plan  for 
cooperation  among  fruit  growers  of  the  Hudson  River  Valley 
with  a  view  to  improving  our  marketing  conditions.  The  result 
of  their  efforts  was  a  meeting  of  some  forty  men  in  Milton,  when 
the  subject  was  discussed  and  a  committee  of  five  appointed,  of 
which  I  was  one,  to  draft  a  constitution  and  by-laws  for  a 
Cooperative  Association,  and  report  at  a  meeting  a  fortnight  later. 

The  name  Hudson  River  Fruit  Exchange,  Inc.,  was  decided 
upon  with  headquarters  at  Milton,  because  from  that  point  we 
could  get  better  telephone  arrangements  than  from  any  other. 

The  committee  finally  adopted  the  following  preamble: 

"The  object  of  this  Exchange  shall  be  to  encourage  the  coopera- 
tion of  the  fruit  growers  of  the  Hudson  River  valley  for  the  pro- 
tection and  advancement  of  their  common  interests. 

First.  By  securing  and  disseminating  such  scientific  and  prac- 
tical information  as  shall  promote  the  general  advancement  of  the 
fruit  growing  interests  in  this  district  and  shall  'tend  to  the  im- 
provement of  the  quality  and  quantity  of  our  products. 

Second.  By  securing  such  legislation  as  may  be  advantageous 
and  preventing  that  which  may  be  detrimental. 

Third.  By  securing  such  improved  facilities  in  transportation 
as  shall  tend  to  give  us  more  expeditious  and  economical  distribu- 
tion of  our  products. 

Fourth.  By  endeavoring  to  secure  a  better  and  more  uniform 
system  of  packing  and  package. 

Fifth.  By  devising  some  system  of  marketing  our  products,  as 
shall  open  up  and  develop  markets,  and  to  give  the  growers  a 
fair  and  remunerative  return. 

Sixth.  And  endeavor  to  obtain  such  improved  system  of  crop 
reports  as  shall  furnish  accurate  information  concerning  produc- 
tion, thereby  enabling  the  fruit  growers  to  know  the  exact  situ- 
ation. 

[10] 


11 

Seventh.  By  cooperative  purchase  of  such  supplies  as  are  needed 
by  the  members. 

We  determined  that  it  would  be  advisable  to  incorporate  a 
company,  venturing  slowly,  as  this  was  a  new  deal  to  us  all.  We 
set  the  capital  stock  at  $2000  divided  into  100  shares  at  twenty 
dollars  each  —  no  member  to  own  more  than  four  shares.  Stock 
does  not  carry  voting  power.  Each  member  has  one  vote  only 
in  the  Hudson  River  Fruit  Exchange,  Inc. 

The  government  is  vested  in  an  executive  committee  of  five 
who  were  chosen  in  1912,  one  for  three  years,  two  for  two  years, 
and  two  for  one  year.  As  these  terms  expire  members  are  elected 
for  terms  of  three  years.  We  thus  always  have  three  men  fa- 
miliar with  the  work.  The  committee  annually,  from  its  own 
members,  appoints  the  officers  for  the  year.  All  are  subject  to 
recall  by  the  Exchange. 

Three  articles  of  the  by-laws  of  most  importance  are: 

Art.  VI.  Members  of  this  Exchange  bind  themselves  when  con- 
signing fruit,  to  ship  only  to  commission  houses  or  auctions  duly 
designated  by  the  Exchange.  They  also  agree  to  ship  all  fruit  up 
to  grade  under  the  label  of  the  Exchange,  and  fruit  not  up  to 
grade  without  the  label. 

Art.  VII.  Fruit  sold  through  the  Exchange  f.  o.  b.  shipping 
point  or  on  track  shall  pay  to  the  Exchange  a  commission  of  3 
per  cent,  of  the  gross  price.  In  such  cases  the  Exchange  stands 
behind  such  sales  and  guarantees  the  price  to  the  grower.  The 
members  reserve  the  right  to  negotiate  private  sales  on  which  no 
commission  shall  be  due  the  Exchange. 

The  last  sentence  of  Article  VII  caused  much  discussion  and 
many  members  feel  that  it  should  not  be  in,  and  we  have  made 
efforts  to  have  it  removed,  but  I  regret  to  say  that  it  still  stands. 
I  shall  take  up  this  matter  later  on. 

Art.  VIII.  At  the  end  of  each  fiscal  year,  after  all  expenses  of 
the  Exchange  shall  have  been  paid,  the  executive  committee  shall 
from  any  surplus  remaining,  declare  a  dividend  not  exceeding  5 
per  cent,  on  the  par  value  of  shares  issued.  The  entire  balance 
of  such  surplus  shall  be  distributed  among  members  who  have 
shipped  fruit  through  the  Exchange  during  such  year  in  propor- 
tion to  the  value  of  their  respective  shipments. 


12 

It  was  May  before  we  were  incorporated  and  ready  to  begin 
work.  As  secretary-treasurer  it  devolved  npon  me  to  find  a 
manager.  Answers  to  advertisement  were  varied  and  curious, 
but  a  man  in  Minnesota  seemed  to  fill  the  bill,  though  many 
members  felt  that  any  one  totally  unacquainted  with  this  region 
Avould  never  do.  But  this  man's  references  were  so  good  and 
his  letters  so  clean  cut  that  I  wired  him  to  come  on,  and  we  have 
signed  with  him  for  the  third  season.  I  tell  you  this  because  the 
manager  is  the  heart  and  soul  of  any  cooperative  concern. 

It  was  June  when  he  took  hold,  an  utter  stranger  in  the  com- 
munity, with  thirty  scattered  members  willing  to  try  an  experi- 
ment.    That  was  about  the  size  of  it. 

Our  commission  men  were  chosen  with  a  view  to  concentrating 
our  shipments  to  prevent  competition  with  ourselves  and  to  let 
buyers  know  just  where  our  fruit  was  to  be  found.  The  houses 
chosen  w^ere  naturally  those  we  were  used  to  and  had  confidence  in. 

The  custom  in  our  section  has  been  for  such  houses  to  pay 
their  agents  3  of  the  10  per  cent,  charged  the  farmer  for  selling. 
We  arranged  with  most  of  our  houses  that  the  Exchange  be  made 
agent  and  receive  that  3  per  cent,  on  all  produce  consigned  by 
members  of  the  Exchange.     That  was  to  be  our  source  of  revenue. 

Mr.  Hilderbrand,  our  manager,  arranged  to  supply  complete 
market  reports  to  our  members  each  morning  by  phone.  Until 
then  few  of  us  had  been  able  to  get  any  reliable  reports,  and  the 
custom  of  the  many  local  buyers  had  been  to  use  this  ignorance 
very  much  to  their  own  advantage.  Eor  instance,  those  buyers 
receive  from  their  houses  in  berry  time,  ten  cents  per  crate  for 
buying,  and  each  morning  receive  word  as  to  what  they  shall  pay 
that  day,  let  us  say  for  strawberries.  Supposing  the  price  given 
them  be  ten  cents  per  quart.  Under  the  old  system  the  buyer  paid 
what  he  could  make  the  grower  accept,  and  pocketed  the  balance. 
The  Exchange  entered  the  field  and  paid  the  full  daily  price  as 
well  as  giving  complete  market  reports,  with  the  result  that  for 
the  first  time  in  our  section  the  local  price  of  berries  was  kept 
on  a  par  with  the  wholesale  prices  in  the  Eastern  markets. 

In  this  connection  comes  in  the  last  sentence  of  article  VI I 
of  our  by-laws  which  reads  ^'  The  members  reserve  the  right  to 
negotiate  private  sales  on  which  no  commission  shall  be  due  the 


13 

Excliange.''  Members  received  the  service  of  the  Exchange  in 
market  reports  and  daily  prices,  and  being  fully  posted  would 
sell  to  outsiders  at  those  prices  to  save  the  3  per  cent,  which 
they  would  have  paid  if  selling  through  the  Exchange.  They 
refused  to  consider  that  it  was  the  Exchange  which  made  those 
sales  possible,  and  stated  that  they  were  in  it  only  for  what  they 
could  get  out  of  it.  How  much  fairer  to  all  it  would  be  if  all 
sales  f.  0.  b.  paid  the  small  commission  to  the  Exchange,  and  how 
much  stronger  the  union  would  be. 

In  1912  our  fall  fruits  were  practically  failures,  and  we  took 
up  the  buying  end.  Oats  were  then  selling  locally  at  sixty-six 
cents  per  bushel.  Mr.  Hildebrand  landed  the  first  carload  at 
Milton  direct  from  Minnesota  at  thirty-eight  cents.  Cheered  by 
that  success  he  began  on  bran,  middlings,  scratchfeed,  flour,  etc., 
and  that  first  winter  sold  twenty  carloads  at  a  saving  of  some 
$2500,  to  our  members.  We  now  buy  our  flour  at  about  $5.25  per 
barrel  landed  at  our  stations  of  a  grade  that  we  can  not  duplicate 
there  for  $7.50. 

We  then  turned  to  spray  materials  and  fertilizers.  Average 
prices  for  commercial  lime-sulphur  had  been  $9  to  $10  per  barrel. 
We  cut  it  to  $5.  We  also  furnish  sulphur  and  lime  to  those  who 
cook  their  own  stuff  at  about  the  same  saving. 

The  first  year  we  bought  some  250  tons  of  chemical  fertilizer 
of  all  sorts  at  an  average  saving  of  $5  per  ton.  This  included  a 
goodly  amoimt  of  ground  rock  (acid  phosphate)  which,  as  you 
know,  sells  around  $12  to  $14  per  ton  and  pulls  down  the  saving 
average. 

On  all  these  purchases  the  members  paid  3  per  cent,  to  the 
Exchange. 

The  first  season  our  actual  paid-in  cash  capital  was  about  $500. 
And  on  that  we  did  a  business  of  over  $110,000.  And  we  ended 
our  first  year  showing  a  small  margin  over  and  above  all  outlay, 
but  with  savings  profits  to  the  members  on  purchases  and  sales 
of  several  thousand  dollars. 

Our  second  year  started  with  about  $12{)0  with  which  we  did 
a  business  of  over  $232,000.  Of  this  some  $30,000  was  f.  o.  b. 
sales  by  the  Exchange.  Strawberry  and  pear  buyers  came  to  us 
and  stayed  through  the  season.     The  ordinary  commission  house 


14 

considers  500  crates  of  strawberries  a  day  as  a  large  business. 
There  were  many  days  last  season  when  the  Exchange  sold  800 
to  900  crates  a  day  for  its  members. 

About  3,000  barrels  of  pears  w^ere  sold  to  England  and  a  be- 
ginning made  with  apples.  Sales  covered  a  wide  territory,  as 
our  fruits  were  shipped  as  far  west  as  Wisconsin,  and  south  into 
Florida.     Some  ten  carloads  of  currants  were  sold  experimentally. 

We  have  bought  to  date  some  twenty-five  carloads  of  feed,  and 
twenty-one  carloads  of  manure  at  a  saving  of  about  25  per  cent. 
The  purchases  have  amoimted  to  about  $11,000,  which  does  not 
include  this  year's  fertilizer,  nor  spray  materials,  upon  which  we 
have  even  lower  quotations  than  last  year. 

We  now  have  eighty-four  members,  and  the  Executive  com- 
mittee has  decided  to  recommend  that  our  capital  stock  be  in- 
creased, in  order  to  make  room  for  those  who  seem  to  want  to 
join  us,  also  with  a  view  to  providing  capital  for  greater  work. 

It  seems  certain  from  the  experience  of  this  year  that  next  fall 
we  shall  hire  cold  storage  in  ^ew  York  City  and  keep  our  own 
man  there  to  bill  out  our  apples  as  wanted  for  our  widening 
markets. 

There  is  one  thing  of  great  importance  in  building  up  a  busi- 
ness of  this  sort  and  that  is  the  choice  of  a  manager.  It  takes  a 
man's  whole  time  and  he  must  be  paid  enough  to  make  it  worth 
his  while  to  hustle  and  grow  with  the  business.  A  man  at  from 
$125  to  $200  a  month  to  start  with  will  be  a  better  investment  than 
the  fellow  who  is  only  worth  $50. 


THE  EXTENT  TO  WHICH  COOPERATION  IN  EUROPE 
IS  ADAPTABLE  TO  AMERICAN  CONDITIONS 

By  F.  H.  Allen  and  C.  C.  Mitchell,  of  the  Arnericmi   Commission  for  the 
Study  of  Agricultural  Conditions  in  Europe 

To  what  extent  is  European  cooperation  adaptable  to  American 
conditions  ?  This  depends  upon  several  things.  1.  The  relative 
conditions,  not  between  Europe  and  America  as  a  whole,  but 
between  certain  countries  in  Europe  and  the  corresponding 
States  in  America  which  most  nearly  resemble  them  in  govern- 
ment, character  of  the  people,  climate,  crops  cultivated,  distance 
to  market,  land  tenure  (whether  operated  by  the  owner  or  tenant), 
size  of  the  farms  and  conditions  generally.  Example :  Cooperation 
as  practised  in  France  will  meet  the  needs  of  ^ew  York  State, 
that  in  Denmark  is  similar  to  that  in  Wisconsin,  etc. 

2.  The  hind  of  husiness  done  by  the  cooperative  society  has  a 
great  deal  to  do  with  its  adaptability  and  it  may  be  said  in  a 
general  way  that  business  of  a  similar  character  in  Europe  can 
be  done  in  a  similar  manner  in  America,  or  vice  versa,  provided 
other  fundamental  conditions  are  not  too  divergent.  The  Citrus 
Fruit  Growers  Federation  of  Valencia  in  Spain  operates  sub- 
stantially in  the  same  manner  as  the  Citrus  Fruit  Exchanges  of 
California.  Each  does  an  enormous  business  with  operations  ex- 
tending over  a  large  field.  They  are  based  upon  local  societies  of 
fruit  growers  who  agree  to  furnish  all  their  product  to  the  Fed- 
eration, which  attends  to  the  collection,  grading  and  packing, 
transportation  and  sale  in  the  consuming  centres  under  the  super- 
vision of  its  own  agents.  Each  maintains  a  bureau  of  quotations 
and  market  information,  secures  proper  accommodation  from  the 
transportation  companies  and  intercedes  with  the  government  to 
see  that  its  members  are  not  discriminated  against  in  legislation. 

3.  The  size  of  farms,  and  density  of  population.  Cooperation 
succeeds  in  small,  densely  populated,  intensely  cultivated  countries 
like  Switzerland,  the  Netherlands  and  the  German  states,  and  also 
in  the  sparsely  populated,  extensively  cultivated,  semi-arctic  large 
farms  of  Russia,  and  in  the  semi-tropical  regions  of  Spain  and 
Italy,  where  the  character  of  the  people  is  as  different  as  the 

[15] 


16 

climate  and  the  crops.  Provided  the  owners  of  medium  sized  or 
large  farms  find  difficulty  in  getting  their  produce  to  the  consumer 
without  having  too  large  a  part  of  the  price  paid  by  the  consumer 
absorbed  by  intermediaries,  they  have  found  it  almost  as  greatly 
to  their  advantage  to  cooperate  as  it  is  to  the  advantage  of  very 
small  farmers  to  cooperate.  They  have  the  additional  advantage 
of  fewer  members  to  keep  in  accord  in  proportion  to  the  amount  of 
business  done. 

4.  Liability  —  limited  or  unlimited.  The  form  of  unlimited 
liability,  still  followed  in  Germany  and  some  of  the  other  coun- 
tries which  first  adopted  cooperation,  is  not  likely  to  be  looked 
upon  with  favor  in  America,  nor  has  it  been  followed  in  the  more 
recent  and  successful  cooperative  organizations  among  people  who 
are  democratic,  progressive  and  individualistic,  like  the  people  in 
France  and  the  British  Isles.  The  members  of  cooperative  so- 
cieties or  joint  stock  corporations  organized  with  limited  liability, 
are  only  responsible  for  the  acts  of  other  members  up  to  a  certain 
specified  amount,  agreed  upon.  In  adapting  the  European  co- 
operative methods  to  American  conditions  the  sort  of  changes 
necessary  are  of  this  type,  and  when  we  compare  the  laws  and 
constitutions  under  which  some  of  the  most  successful  cooperative 
societies  in  France,  Great  Britain  and  Denmark  are  operating, 
Avith  those  under  w^hich  the  most  successful  associations  of  a  simi- 
lar character  in  America  are  operating,  little  difference  is  noted. 

5.  Tenure  of  land  and  permanency  of  occupation.  The  trend 
in  Europe  is  from  tenancy  to  proprietorship,  the  dividing  of  very 
large  estates,  their  sale  in  parcels  to  small  landholders  who  take  up 
farms  of  moderate  size  wdiich  may  be  operated  directly  by  the 
owner  and  his  owm  family,  who  then  join  into  cooperative  trus- 
tees. The  tendency  in  America  is  almost  the  reverse  —  from 
proprietorship  to  tenancy  and  from  medium  sized  holdings  to  large 
estates,  through  the  combining  of  small  farms.  The  proportion  of 
farmers  owning  their  own  land  at  the  present  moment  is  not  so 
very  different  in  Europe  from  that  in  America  as  may  be  sup- 
posed, and  if  the  present  tendencies  continue  there  will  soon  be 
more  tenant  farming  in  America  than  there  is  in  Europe.  The 
system  of  absentee-proprietorship  is  bad  for  agriculture  and 
tenants  who  change  from  one  farm  to  another  every  year  or  two 


do  not  form  a  good  membership  for  cooperative  societies.  On 
the  other  hand,  the  establishment  of  cooperative  societies  in  our 
rural  communities  may  tend  to  diminish  roving  tenancy,  in  fact 
it  has  accomplished  this  result  in  the  European  countries. 

6.  Eajndly  changing  conditions.  In  both  Europe  and  America 
education,  scientific  methods,  transportation  and  manufacturing 
progress,  and  the  taking  up  of  the  surplus  of  virgin  agricultural 
lands  throughout  the  world  have  so  changed  and  are  so  changing 
that  agricultural  conditions  to-day  are  not  what  they  were  a 
few  years  ago.  For  this  reason  the  farmers  in  Europe  have  been 
combining  and  going  more  and  more  into  the  cooperative  method 
of  conducting  their  business  for  the  last  thirty  years  until  now 
it  is  estimated  that  perhaps  one-half  of  the  agricultural  operations 
in  Europe  are  conducted  on  the  cooperative  principle.  This  fact 
alone  would  seem  sufficient  to  warrant  us  in  carefully  considering 
the  advantages  to  be  gained  by  adopting  this  method  of  conduct- 
ing agricultural  affairs. 

7.  Parent  associations  such  as  the  ''  Syndicats  Agricoles "  in 
France,  the  ''  Sindicatos  Agricolas  "  in  Spain  and  ''  Censor zi 
Agrari "  in  Italy,  which  were  started  about  thirty  years  ago  as 
societies  for  purchasing  farm  supplies  and  agencies  of  a  social 
character  similar  to  our  Granges,  have  been  used  as  the  founda- 
tion on  which  to  build  up  all  manner  of  cooperative  enterprises 
in  these  countries.  Through  the  close  acquaintanceship  of  the 
members  and  their  experience  in  working  together,  a  great  deal 
of  time  and  risk  was  saved  in  starting  new  associatio-ns  for  insur- 
ance, agricultural  credit  and  the  marketing  of  farm  products. 
In  France  particularly  the  membership  of  these  new  associa- 
tions has  been  limited  to  that  of  the  ^'  Syndicats,"  and  if  any  one 
desires  to  become  a  member  of  an  agricultural  credit  society 
or  of  an  insurance  association,  he  would  first  have  to  be  admitted 
to  membership  in  the  '^  S^^ndicats  Agricoles.'' 

Our  Granges  ought  to  be  able  to  initiate  and  federate  all  kinds 
of  cooperative  business  enterprises  which  it  may  be  to  the  advan- 
tage of  farmers  to  undertake,  and  it  is  likely  that  such  a  policy 
might  go  a  long  way  toward  preventing  the  failures  which  might 
otherwise  result  from  bringing  together  people  who  have  had  no 
experience  in  working  in  common. 


8.  Agricultural  Credit  Banks  were  first  adopted  as  the  founda- 
tion for  cooperative  development  in  GeiTnanj.  The  Landshaften, 
or  Land  Mortgage  Banks,  being  started  as  associations  of  borrowers 
among  owners  of  large  land  holdings,  at  a  time  w^hen  it  was  dif- 
ficult for  them  to  get  loans  on  their  lands  from  outside  sources. 
The  Reifeissen  Banks,  which  were  formed  by  associations  of 
small  borrowers  to  provide  themselves  with  short  time  loans,  se- 
cured by  the  collective  guarantee  of  all  the  members  and  made 
on  the  basis  of  personal  character.  The  character  of  the  people 
and  the  conditions  under  which  these  banks  were  started  were  so 
radically  different  from  ours,  and  also  from  those  obtaining  in 
France,  Denmark  and  the  British  Isles,  that  these  special  condi- 
tions should  be  considered  in  speaking  of  the  German  system.  The 
people  were  many  of  them  socialistic  or  accustomed  to  com- 
munal activity  and  others  were  imperialistic  —  there  was  very 
little  idea  of  democracy  among  them.  There  were  no  banking 
facilities  such  as  our  farmers  enjoy,  but  the  people  were  suffering 
under  the  usurers  to  escape  from  whose  grasp  they  formed  the 
credit  associations.  Their  first  need  was  borrowing  facilities, 
and  marketing  and  the  purchasing  of  supplies  were  secondary. 

Our  conditions  are  almost  the  reverse  in  every  respect.  We 
have  a  democratic,  individualistic,  fairly  successful  lot  of  farmers, 
who  are  more  concerned  with  the  question  of  taking  adA^antage  of 
collective  purchasing  of  their  supplies  and  the  joint  marketing 
of  their  produce  and  the  enjoyment  of  the  luxuries  of  modern 
civilization  than  with  the  bare  necessities  of  life.  They  are  al- 
ready served  by  a  large  number  of  small  country  banks  distributed 
throughout  the  country,  in  many  of  which  they  are  the  stock- 
holders and  directors,  and  from  which  they  are  receiving  a  reason- 
able service  at  fair  rates  of  interest. 

Owing  to  the  large  number  of  German- Americans  and  the  close 
trade  relations  existing  between  Germany  and  America,  we  have 
been  led  to  consider  German  cooperation  as  typical  of  alT  Euro- 
pean cooperation.  This  is  a  fundamental  mistake,  and  if  we  were 
to  undertake  to  apply  German  cooperation  directly  it  would  un- 
doubtedly meet  with  little  approval  in  most  parts  of  the  United 
States.  In  the  first  place,  the  provision  for  unlimited  liability  is 
as  objectionable  to  our  democratic  people  as  it  is  to  those  in  France 


19 

and  Great  Britain,  and  secondly,  the  plan  of  starting  with  finan- 
cial institutions  and  developing  from  that  to  societies  for  purchas- 
ing, marketing,  insurance,  etc.,  is  reversing  the  natural  order  for 
our  farmers.  It  is  not  likely  to  prove  best  for  them  to  borrow 
money  before  they  have  learned  by  experience  in  what  way  they 
can  use  it  to  the  best  advantage,  but  rather  they  should  start  with 
cooperative  societies  for  the  purchasing  of  their  supplies,  jointly 
at  wholesale,  and  the  packing,  grading,  shipping  and  marketing  of 
their  produce  in  carload  lots.  After  they  have  had  a  little  experi- 
ence in  performing  these  operations  in  a  small  way,  they  will  then 
feel  the  need  of  credit  facilities  to  enable  them  to  do  it  in  a  larger 
way,  and  they  will  then  proceed  to  form  themselves  into  credit 
unions  or  to  establish  credit  departments  in  the  then  existing 
cooperative  associations.  And  these  associations  will  then  be  able 
to  secure  better  accommodations  from  existing  banks,  and  bring 
more  business  to  these  banks. 

This  has  been  the  experience  and  mode  of  development  of  the 
cooperative  societies  in  France,  the  British  Isles,  Denmark  and 
most  of  the  European  countries  which  have  more  recently  adopted 
the  cooperative  method  of  conducting  their  business,  and  this  is 
the  method  under  which  the  most  successful  cooperative  enter- 
prises in  America  have  developed. 

It  has  not  been  necessary  for  the  citrus  fruit  exchanges  in  Cali- 
fornia to  have  an  agricultural  credit  system  at  their  command, 
nor  even  for  the  cooperative  grain  elevators  of  the  middle  west, 
before  being  able  to  carry  on  a  successful  cooperative  business. 
The  great  cooperative  consumers'  societies  of  Great  Britain  have 
started  without  being  backed  by  cooperative  credit  associations, 
and  the  cooperative  Wholesale  Society  of  London  has  finally  pro- 
vided its  own  banking  department  within  itself.  This  does  not 
mean  that  agricultural  credit  is  not  advantageous,  but  that  it  is 
not  absolutely  a  necessary  foundation  with  which  to  start. 

9.  Cooperators  who  do  not  cooperate.  In  organizing  a  co- 
operative association  those  who  band  themselves  together  to  better 
their  condition  should  keep  clearly  in  mind  the  fact  that  the 
interests  who  have  been  treating  them  unfairly  are  naturally  going 
to  try  to  prevent  them  from  succeeding,  and  they  should  deter- 
mine from  the  very  start  that  they  are  not  going  to  allow  their 


20 

association  to  be  broken  up  by  any  acts  of  disloyalty.  Great  care 
should  be  taken  to  prevent  any  traitorous  persons  from  being 
admitted  to  the  society^  and  no  member  of  the  society  should  be 
fooled  into  thinking  that  the  special  inducements  which  may  be 
offered  them  by  parties  interested  in  breaking  up  their  coopera- 
tive association  will  be  continued  any  longer  than  just  sufficient 
to  disband  the  members,  after  which  conditions  more  onerous  than 
before  are  sure  to  follow.  Experience  has  clearly  proved  that  it 
pays  in  the  long  run  to  resist  temptation  and  stand  by  the  asso- 
ciation, and  it  is  usually  provided  that  all  produce  of  the  mem- 
bers that  can  be  handled  by  the  association  shall  be  delivered  to  it. 

10.  Object  of  cooperation,  and  the  standard  of  success.  Agri- 
cultural business  does  not  lend  itself  readily  to  the  development 
of  enormous  profits.  It  differs  in  this  respect  from  some  of  the 
other  kinds  of  business  which  are  so  often  exploited  by  joint  stock 
corporations  in  which  one  or  two  promoters  and  a  few  of  people  at 
the  head  of  the  enterprise  figure  on  making  enormous  profits 
Avith  little  effort  and  still  having  the  business  provide  the  stock- 
holders with  a  reasonable  rate  of  interest. 

Where  a  number  of  farmers  are  already  in  business  and  just 
about  making  both  ends  meet  under  their  present  conditions,  they 
can  sometimes  see  that,  by  clubbing  together  and  buying  their 
supplies  at  wholesale  and  shipping  their  produce  collectively, 
the  economies  to  be  effected  in  this  way  will  result  in  a  reasonable 
profit.  This  profit  or  saving,  when  divided  among  the  members 
in  proportion  to  the  amount  which  each  has  contributed  toward 
making  it,  may  not  be  very  large,  but  the  farmers  would  not 
readily  enter  into  any  combination  by  which  this  profit  might  be 
almost  entirely  taken  by  a  few.  They  know  too  much  about  their 
business  to  allow  themselves  to  be  taken  advantage  of  in  this  way, 
and  this  appears  to  be  the  main  reason  why  the  cooperative  form 
of  corporation  has  been  adopted  so  largely  among  farmers  who 
have  combined,  instead  of  the  joint  stock  form  of  corporation. 

11.  New  Yorh  State  Agriculture  should  lend  itself  readily  to 
the  kind  of  corjperation  which  has  been  almost  universally  suc- 
cessful in  very  European  country,  for  the  production  and  trans- 
formation, grading,  packing,  transportation  and  sale  of  dairy 
products,  such  as  butter  and  other  staple  products  of  ;N"ew  York, 


21 

like  eggs  and  fruit,  are  being  handled  over  there  to  great  advan- 
tage bv  cooperative  associations. 

Cold  storage  collecting  stations  in  which  perishable  products 
can  be  properly  handled  near  the  point  of  production  by  coopera- 
tive associations  of  producers  would  go  a  long  way  toward  prevent- 
ing the  loss  of  such  perishable  products  as  meats,  poultry  and 
fruit,  thus  preventing  the  necessity  of  condemning  tons  of  valuable 
food  products  before  they  can  reach  the  consumer,  as  happened 
this  year  in  the  case  of  poultry  at  Thanksgiving  time.  The  U.  S. 
Department  of  Agriculture  has  carried  on  a  work  of  investiga- 
tion, and  maintains  a  service  for  advising  shippers  of  perishable 
produce,  which  can  best  be  taken  advantage  of  by  large  pri- 
vate dealers  or  cooperative  associations  able  to  bear  the  expense 
of  installing  proper  plant  and  equipment.  It  was  clearly  demon- 
strated this  year  that  those  who  had  taken  the  advice  of  this  Bureau 
of  the  Department  of  Agriculture  were  successful  in  shipping 
poultry  without  deterioration  or  loss  under  the  same  weather  con- 
ditions which  caused  the  enormous  loss  upon  shipments  of  poultry 
carelessly  prepared  for  transportation. 

12.  Federation  and  Coordination,  of  local  associations  is  abso- 
lutely necessary  for  the  following  reasons : 

(a)  Regulating  power  is  given  in  matters  of  purchasing  in 
large  quantities  and  bringing  influence  to  bear  upon  transporta- 
tion companies  and  legislatures  to  insure  proper  treatment. 

(b)  To  prevent  overlapping  in  distribution  and  undue  compe- 
tition among  the  locals. 

(c)  To  equalize  the  effect  of  overproduction  in  one  locality  and 
crop  failure  in  another. 

(d)  To  effect  economies  in  management  and  minimize  the 
overhead  expenses  applicable  to  the  business  of  the  locals. 

(e)  To  maintain  a  central  clearing  house  through  which  all 
local  associations  may  be  kept  in  touch  with  conditions  in  the 
several  parts  of  the  country  and  with  markets,  and  movement  of 
produce.  The  citrus  fruit  exchanges  in  California  offer  an  ex- 
cellent example  of  what  has  already  been  done  in  this  country. 

13.  C ooperation  is  Easy.  A  case  in  point  is  that  of  the  straw- 
berry growers  in  Finisterre,  France.  The  dealers  in  strawben*ies 
in  England  first  established  the  market  for  French  strawberries 


22 

by  sending  Inivers  to  Brest  and  when  French  tradesmen  in  that 
city  saw  how  easy  it  was,  they  started  a  small  collecting  and 
shipping  business  of  their  own.  The  farmers  who  produced  the 
strawberries  in  this  region,  noticing  how  easy  it  was  for  the  local 
tradesmen  to  collect  and  ship  the  fruit  to  England  through  a 
combination,  decided  to  try  a  combination  of  their  own.  A  very 
few  of  them  formed  a  small  cooperative  society  for  grading,  pack- 
ing and  marketing,  and  chartered  a  steamer  just  as  they  had  seen 
the  dealers  in  Brest  do  it,  and  were  so  successful  in  their  first 
entei^rise  that  another  group  of  farmers  followed  their  example, 
and  the  next  year  still  another,  so  that  finally  there  were  three 
or  four  separate  combinations,  each  with  its  own  collecting  sta- 
tion and  its  own  chartered  steamship,  all  shipping  fruit  to  the 
British  market  at  the  same  time  and  competing  with  one  another. 
Of  course  the  next  step  was  a  federation  of  all  of  them,  a  central- 
ization of  the  collecting,  grading  and  packing,  a  reduction  in  the 
number  of  people  necessary  to  conduct  the  business  and  the  final 
employment  of  just  one  set  of  steamships  instead  of  three  or  four 
to  carry  on  the  transportation.  This  federation  was  accomplished 
by  a  union  between  the  several  cooperative  associations  and  the 
result  of  it  all  has  been  that  strawberry  raising  has  become  so 
profitable  in  this  region  that  the  amount  of  fruit  produced  has 
increased  enormously. 

14.  The  meaning  of  cooperation.  The  word  ^'  Cooperation  " 
has  been  applied  in  so  many  different  ways  and  there  is  sucii 
a  confusion  about  its  meaning,  that  man^^  people  think  that  they 
can  not  understand  it,  any  more  than  they  can  socialism.  Co- 
operation as  applied  to  the  business  of  farmers  and  consumers  is 
generally  summed  up  in  the  statement  ''  each  for  all  and  all  for 
each."  A  number  of  people  similarly  situated  club  together  to 
give  each  member  of  the  group  the  advantage  of  association  with 
all  the  others,  and  all  the  members  combine  to  benefit  each  of  their 
members.  They  generally  try  to  perform  such  operations  for 
themselves  in  a  better  and  more  economical  way  than  any  out- 
siders can  do  it  for  them,  and  in  spite  of  the  fact  that  outsiders 
tell  them  that  they  do  not  know  how  to  do  business,  and  can  not 
learri  how  —  they  go  right  ahead  and  do  it  just  the  same. 

15.  How  to  Cooperate.     Under  the  laws  governing  Cooperative 


23 

Associations  in  J^ew  York  State:     "  Five  or  more  persons  may 

become  a  cooperative  corporation for  the  purpose  of 

conducting  a  general  produciiig,  manufacturing  and  merchandis- 
ing business  on  the  cooperative  plan by  making, 

signing,  acknov^ledging  and  filing  a  certificate  in  the  manner  pre- 
scribed by  law." 

The  Bureau  of  Cooperative  Associations  in  the  ISTew  York 
State  Department  of  Agriculture  is  prepared  to  send  a  representa- 
tive to  any  community  in  the  state  in  which  five  or  more  persons 
may  desire  to  form  a  cooperative  association,  and  advice  will  be 
given  by  a  representative  of  this  Bureau  explaining  exactly  how 
to  go  about  it.  There  are  already  many  successful  cooperative 
associations  in  operation  in  Xew  York  and  the  surrounding 
states,  and  the  general  opinion  is  developing,  even  among  the 
heads  of  large  joint-stock  corporations  that  the  cooperative  form 
of  combination  is  unusually  well  adapted  to  the  business  of  the 
farmers  and  also  to  that  of  consumers. 


COOPERATIVE  BUYING  BY  CONSUMERS 

An   Il^TERESTIIvrG   TeIAL   OF   THE   ENGLISH    PlAN   IN   MoNTCLAIE, 

K  J. 

By  Emerison  P.  Harris 

There  are  several  things  about  buying  our  daily  necessities 
and  occasional  requirements  which  make  purchasing  unsatisfac- 
tory. 

In  the  first  place  it  is  not  easy  to  decide  what  one  wants  and 
ought  to  have,  and  when  the  decision  is  reached  it  is  not  easy 
to  get  what  one  wants  and  to  know  that  he  is  getting  it.  In  the 
purchase  of  foods  one  would  be  glad  to  feel  that  it  was  reasonably 
clean,  but  how  can  he? 

Then  in  the  matter  of  cost  how  can  one  get  things  as  low  as 
they  can  be  legitimately  sold  ?  It  is  cold  comfort  to  be  made  to 
believe  occasionally  that  one  has  a  bargain.  For  must  not  a 
bargain  be  either  exceptional  or  at  the  expense  of  some  other 
buyer  ? 

One  can  hardly  be  a  judge  of  all  the  articles  which  in  these 
days  enter  into  his  requirements,  he  can  not  see  them  made,  nor 
does  he  know  what  it  costs  to  make  them.  How  can  the  buyer 
who  believes  in  real  economy  as  a  principle,  get  good  value,  clean 
honest  goods,  of  full  measure  and  at  the  lowest  price?  How  can 
he  get  these  things  and  the  peace  of  mind  which  would  go  with 
the  knowing  ? 

He  can  ask  the  only  expert  with  which  he  comes  in  contact, 
the  dealer,  but  the  dealer  is  confessedly  biased.  Can  the  dealer 
live  who  really  puts  himself  in  the  place  of  the  consumer,  and 
advises  him  to  buy  the  article  upon  which  there  is  a  small  profit  ? 
Can  the  dealer  habitually  advise  an  inquirer  to  go  to  another 
store  because  his  does  not  keep  the  article  which  is  really  best  for 
the  possible  customer  to  buy  ? 

In  short,  is  not  there  an  underlying  antagonism  between  the 
interests  of  the  dealer  and  those  of  the  consumer?  Does  not  the 
motive  of  the  dealer  whose  interests  depends  upon  swelling  the 
profit,  preclude  his  rendering  the  best  possible  service  for  the 
consumer  ? 

[24] 


25 

What  is  the  remedy? 

When  we  passed  from  the  days  of  hand  made  and  home  made, 
production  was  taken  away  from  the  consumer  to  a  distant  point 
where  soil  and  climate  or  large  unit  power  plants  with  automatic 
machinery  made  production  cheaper  by  far.  But  the  machinery 
which  has  grown  up  to  bring  producer  and  consumer  together 
again  is  so  poorly  adapted  to  the  purpose  that,  a  large  part  of  the 
economy  of  machine  production  is  absorbed  by  the  wastes  of 
distribution  so  that  the  consumer  suffers.  And  the  machinery 
of  distribution  is  in  the  hands  of  middle  men  whose  profits  depend 
upon  swelling  the  difference  between  what  the  producer  gets  and 
what  the  consumer  pays  for  the  product. 

!N'ow  both  the  producer  and  the  consumer  are  interested  in 
reducing  the  cost  of  distribution,  but  the  middle  men  as  a  class 
profit  most  by  keeping  the  cost  up.  Must  we  not,  therefore,  look 
for  the  remedy  by  putting  the  machinery  of  distribution  in  the 
hands  of  the  two  interests  which  seek  to  economize  and  make 
fundamentally  efficient  the  processes  of  distribution.  Does  it  not 
look  as  though  the  initial  steps  of  distribution  should  be  guided 
by  the  producer  and  the  final  steps  by  the  consumer? 

Instead  of  going  out  to  seek  commodities,  consumers  have 
waited  for  products  to  be  pushed  upon  them  by  the  middleman. 
The  distribution  in  search  of  profit  aggressively  urges  his  wares 
and  the  machinery  of  aggressiveness  is  expensive  to  the  con- 
sumer. Many  articles  formerly  made  in  the  kitchen  are*  now 
made  in  the  factory  and  brought  back  to  the  consumer  with 
various  expenses  attached  which  make  for  the  profit  of  the  dis- 
tributor but  not  for  the  service  of  the  consumer.  Goods  which 
should  be  nutritious  and  pure  as  a  matter  of  course,  we  can  only 
.  get  after  paying  a  tax  for  telling  us  they  are  all  right.  This  tax 
for  disadvantageous  advertising  often  costs  a  good  percentage  of 
the  cost  to  produce  the  product. 

There  is  a  very  general  and  growing  feeling  in  favor  of  organi- 
.^ation  on  the  part  of  consumers  to  serve  this  mutual  interest. 
The  most  simple  form  which  the  movement  takes  is  the  buying 
club.  A  number  of  families  join,  make  a  list  of  their  requirements 
and  designate  some  one  person  in  the  group  to  buy  for  them  in 
quantities  thus   securing   lower   prices   than   would   be  paid   at 


26 

retail.  Tliis  crude  effort  puts  the  task  of  selection  upon  some- 
one best  fitted  and  lets  him  do  the  marketing  for  the  whote  group. 
In  the  club  the  feeling  of  mutuality  of  interests  of  consumers  is 
developed.  The  members  of  the  group  come  to  see  that  a  certain 
part  of  the  work  of  selection  and  buying  can  be  done  for  all  at 
the  same  transaction  with  practically  the  same  effort  that  each 
member  of  the  group  would  have  to  put  forth  for  himself  alone. 

But  while  the  buying  club  is  in  the  right  direction  it  has  cer- 
tain weaknesses  which  tend  to  shorten  its  life.  For  one  thing  it 
does  not  buy  in  such  a  way  as  to  get  the  lowest  prices.  Again 
the  trouble  of  dividing  up  the  purchases  among  the  members  of 
the  group  is  too  great  to  be  done  voluntarily  and  too  small  to  be 
hired  advantageously.  These  and  various  other  weaknesses  tend  to 
offset  the  advantages  to  a  very  considerable  extent.  The  increased 
initiative  on  the  part  of  the  consumer  to  reach  out  nearer  the 
producer  and  the  delegating  to  one  such  work  as  saves  each  one 
doing  it  for  himself  is  advancing  toward  the  goal. 

The  buying  club  enlarged  in  numbers  and  scope  of  action  and 
systematized  is  essentially  a  cooperative  store. 

A  buying  club  if  it  numbers  even  thirty  or  forty  families  might 
well  come  together  in  the  form  of  a  cooperative  society.  Such  an 
organization  would  simplify  and  tend  to  make  permanent  the 
buying  group.  It  is  a  mistake  to  assume  that  a  cooperative  store 
society  need  necessarily  multiply  expensive  machinery.  In  fact 
that  is  the  mistake  made  by  many  cooperative  stores.  ISTo  rents, 
salaries  or  other  expenses  should  be  incurred  which  are  not  justi- 
fied by  the  necessity  of  the  case.  This  direction  of  appropriate 
action  seems  to  the  writer  the  proper  one  to  give  the  best  idea  of 
the  scope  of  the  cooperative  store. 

The  Montclair,  (X.  J.)  Cooperative  Society  with  which  the 
writer  is  connected  started  out  on  a  scale  sufficient  to  justify 
regular  store  equipment  machinery  and  methods.  We  opened  in 
the  spring  of  1912  with  about  three  hundred  members.  To  pro- 
vide capital  to  buy  fixtures  and  stock  each  member  took  as  many 
ten  dollar  shares  as  he  wished  ranging  from  one  share  to  twenty. 
This  gave  us  a  capital  of  about  $7,500,  which  has  been  increased 
by  additional  members  to  about  $9,300.  Each  member  has  but  one 
vote  no  matter  how  many  shares  he  may  hold.     From  the  first 


27 

profits  6  per  cent,  per  annum  is  paid  on  stock  holdings.  All 
other  profits  except  for  small  reserve  are  divided  among  members 
in  proportion  to  their  purchases  at  the  store. 

Goods  are  sold  for  cash  only,  and  the  prices  are  about  the  prices 
charged  at  other  stores  for  like  goods  and  service.  We  do  not 
believe  in  cutting  prices  but  in  paying  back  all  savings  after  the 
goods  are  paid  for  and  the  expenses  met.  The  cut  price  plan 
usually  comes  to  grief  either  because  other  stores  temporarily  make 
low  prices,  or  because  the  cooperative  store  makes  prices  so  low 
that  it  can  not  pay  its  expenses. 

In  other  words  we  try  to  live  up  to  the  principles  and  practice 
of  Rochdale  Cooperative  movement  by  which  in  England  one- 
fourth  of  the  people  buy  their  supplies  at  a  saving  of  about  one- 
eighth,  and  get  pure  and  honest  goods. 

A  special  feature  of  the  Montclair  store  is  the  way  in  which 
it  meets  the  problem  of  delivery  of  goods  w^hich  in  many  cases  is 
so  wasteful  and  expensive.  All  members  are  credited  with  a 
discount  of  5  per  cent,  upon  their  purchases  to  be  paid  at  the 
end  of  the  quarter.  But  from  this  discount  is  deducted  before 
paying  to  each  member  what  it  has  cost  to  deliver  his  goods  to 
his  house.  To  determine  the  cost  per  call  the  total  expense  of 
delivery  for  the  three  months  is  divided  by  the  total  number  of 
calls  made.  Thus  if  a  member  has  during  the  quarter  bought 
$100  worth  of  goods  he  gets  credit  for  a  discount  of  $5.  If  he 
has  had  no  deliveries  he  gets  the  full  five  dollars.  If  the  wagon 
has  called  say  thirty  times  and  the  cost  has  been  found  to  be 
nine  cents  per  call  $2.70  is  deducted  from  the  $5  and  a  check 
sent  for  the  remaining  $2.30. 

Thus  is  the  housewife  given  incentive  to  systematize  her 
ordering  and  avoid  having  the  wagon  call  two  or  three  times  as 
often  as  necessary.  The  member  who  carries  goods  home  pays 
no  delivery  expenses  and  the  cost  of  delivery  is  borne  by  those 
who  use  the  service  and  in  proportion  to  the  use  made  of  it.  The 
system  is  simple,  has  been  in  use  with  us  since  we  started  and 
we  think  is  a  great  step  toward  economy  in  distribution. 

Our  store  is  doing  $10,000  in  business  per  month,  groceries, 
fruits,  vegetables  and  meats,  employs  some  thirteen  hands  and  is 
at  this  writing  probably  saving  our  members  some  5  to  8  per  cent. 


28 

on  the  cost  of  their  food  stuff  in  addition  to  giving  better  assur- 
ance of  quality,  cleanliness  and  purity.  Larger  savings  can  be 
made  and  many  benefits  conferred  upon  members  as  the  system 
is  perfected  and  the  business  enlarged,  and  we  are  able  to  buy  in 
larger  quantities.  This  latter  we  are  aiming  to  do  by  federating 
a  number  of  stores  in  a  new  company. 

There  are  something  like  a  score  of  cooperative  stores  around 
Xew  York  —  most  of  which  are  small  but  there  is  a  great  interest 
in  the  movement  and  it  is  hoped  that  it  may  gain  a  firm  foot- 
hold in  eastern  United  States.  For  it  promises  much  in  the 
assurance  it  gives  of  pure  goods  at  wholesale  cost  plus  only  the 
expense  of  handling  which  can  be  made  very  small  by  real  and 
persistent  cooperation  of  the  membership  and  management. 
Already  the  cost  of  doing  business  at  the  Montclair  store  has 
been  reduced  to  13  per  cent,  on  retail  price  including  3  per  cent, 
for  delivery  of  goods. 


A   FORM    OF 

BY-LAWS  FOR  COOPERATIVE  SOCIETIES 

Article  I 
Name 
The  name  of  this  corporation  is  Cooperative  Society. 

Article  II 
Location 

The  principal  business  place  of  this  corporation  shall  be  located 
in 

Article  III 
Purposes 

The  purposes  of  this  corporation  are  conducting  a  general  pro- 
ducing, manufacturing  and  merchandising  business  on  the  co- 
operative plan  in  articles  of  common  use,  including  farm  products, 
food    supplies,    farm   machinery    and    supplies,    and    articles   of 

domestic  and  personal  use. 

(Note. — Any  or  all  of  these  purposes  may  be  specified). 

Article  IV 
Directors 

There  shall  be  five  directors,  all  of  whom  must  be  stockholders, 
who  shall  have  general  charge  of  all  the  business  and  property 
of  the  corporation. 

Article  V 

Officers 

The  officers  of  this  corporation  shall  be  chosen  from  among  the 

directors  as  soon  as  practicable  after  the  annual  meeting.    They 

shall  consist  of  a  President,  a  Vice-President,  a  Secretary  and  a 

Treasurer. 

(Note. — More  than  one  Vice-President  may  be  chosen  if  desired,  and  one  person 
may  fill  the  offices  of  both  Secretary''  and  Treasurer) . 

Article  VI 
Duties  of  Officers 

The  duties  of  the  officers  shall  be  those  generally  appertaining 
to  the  several  offices  and  such  additional  duties  as  may  be  pre* 
scribed  by  the  Board  of  Directors. 

[29] 


30 

Article  VII 
Meetings 

Sec.  1.  The  annual  meeting  of  this  corporation  shall  be  held 
on  the  second  Tuesday  of  January  in  each  year  at  the  principal 
business  office  of  the  corporation  and  other  regular  meetings  shall 
be  held  on  the  last  Saturday  of  May  and  November. 

Sec.  2.  Special  meetings  may  be  called  at  any  time  by  the 
President  or  by  order  of  the  Board  of  Directors  and  must  be 
called  by  the  President  at  any  time  on  the  written  request  of  ten 
or  more  stockholders. 

Sec.  3.  Quorum.  A  majority  of.  all  the  stockholders  in  any 
special  or  regular  meeting  shall  be  required  to  constitute  a  quorum 
of  stockholders^  and  a  majority  of  the  full  number  of  directors 
shall  be  required  to  constitute  a  quorum  of  directors. 


Article  VIII 
Capital  Stock 
The  capital  stock  of  this  corporation  shall  consist  of 


dollars,  which  shall  be  represented  by  stock  shares  of  the  par 
value  of  five  dollars  each. 

jiRTICLE    IX 

8toclcliolders 

iSec.  1.  Any  person  owning  one  or  more  shares  of  the  capital 
stock  of  the  corporation,  fully  paid,  shall  be  a  stockholder  and 
entitled  to  one  vote  at  any  regular  or  special  meeting,  but  no 
stockholder  shall  be  entitled  to  more  than  one  vote,  irrespective 
of  the  number  of  shares  of  stock  owned  by  him. 

Sec.  2.  ^o  person  shall  own  capital  stock  of  a  greater  aggi'egate 
par  value  than  five  thousand  dollars. 

Article  X 

Election  of  Directors 

A  full  Board  of  Directors  shall  be  elected  at  each  annual  meet- 
ing, but  vacancies  may  be  filled  by  the  remaining  members  of  this 
Board  or  by  a  special  meeting  of  stockholders. 


Aetigle  XI 
Notice  of  Meeting 

Sec.  1.  A  written  or  printed  notice  of  all  regular  or  special 
meetings  shall  be  mailed  by  the  secretary  to  each  stockholder  at 
his  last  known  address  at  least  ten  days  before  the  date  of  such 
meeting. 

Sec.  2.  The  notice  of  a  special  meeting  shall  specify  the  busi- 
ness to  be  considered  and  transacted  at  such  meeting. 

Article  XII 

Voting 

Any  stoclvholder  may  vote  by  properly  constituted  proxy  or 
in  writing,  providing  the  question  upon  which  he  votes  in  writing 
shall  have  been  submitted  to  him  printed  or  written  and  attached 
by  him  to  his  vote  thereon. 

Article  XIII 

Manager  and  Employees 

The  Board  of  Directors  may  employ  and  appoint  a  manager 
and  such  other  employees  as  may  be  required  for  the  business 
purposes  of  the  corporation. 

Article  XIV 

Dividends 

Sec.   1.   The  Board  of  Directors  may  declare  a  dividend  out 

of  the  net  earnings  of  the  business  of  the  corporation  not  to  exceed 

6    per   cent,    per    annum    on   the   existing   capital    stock    of    the 

corporation. 

Sec.  2.  The  Directors  shall  set  aside  annually  at  least  10  per 
cent,  of  the  net  earnings  of  the  corporation  as  a  reserve  fund, 
until  the  reserve  fund  shall  equal  thirty  per  cent,  of  the  paid  up 
capital  stock. 

Reserve  Fund 

Sec.  4.  A  reserve  fund  of  at  least  20  per  cent,  of  the  capital 
stock,  subscribed  and  paid  for,  shall  be  subscribed  and  paid  to 
the  Company  at  the  same  time. 


32 

Sec.  5.  All  dividends  for  a  period  of  five  years  may  be  paid  in 
capital  stock  at  par. 

Article  XV 

Fiscal  Year 

The  fiscal  year  or  corporation  year  shall  be  coincident  with 
the  calendar  year. 

Article  XVI 

Surety  Bonds 

Any  officer  or  employee  of  the  corporation  shall  give  such 
fidelity  or  surety  bonds  as  may  be  required  by  the  Board  ol 
Directors. 

Article  XVII 

Amendment 

These  by-laws  may  be  amended  at  any  regular  or  special  meet- 
ing of  the  corporation,  provided  the  proposed  amendment  shall 
have  been  submitted  in  writing  to  the  stockholders  with  the  notice 
of  the  meeting  at  which  such  amendment  will  be  considered  and 
acted  upon.  A  majority  vote  of  the  stockholders  present  at  such 
meeting  shall  be  necessary  to  adopt  such  amendment. 

(Form  of  certificate  of  incorporation.) 
We,  the  undersigned,  all  being  of  full  age  and  two-thirds  being 
citizens  of  the  United  States  and  at  least  one  resident  of  the 
State  of  Xew  York,  for  the  purpose  of  forming  a  corporation 
under  article  3  of  the  Business  Corporation  Law,  do  hereby  certify 
and  set  forth  as  follows : 

First. — The  name  of  the  said  corporation  shall  be  Inc. 

Second. —  The  purposes  for  which  the  corporation  are  to  be 
formed  are  as  follows : 

1.  Conducting  a  general  producing,  manufacturing  and  mer- 
chandising business  on  the  cooperative  plan  (as  limited  in  said 
article  3  of  the  Business  Corporations  Law)  in  articles  of  com* 
mon  use,  including  farm  products,  food  supplies,  farm  machinery, 
supplies,  and  articles  of  domestic  and  personal  use. 

Third. — The  amount  of  capital  stock  of  said  Company  shall 
be  dollars. 


33. 

Fourth. — The  number  of  shares  composing  said  capital  stock 
shall  be  shares  of  par  value  of  five  dollars  each  and 

the  amount  of  capital  with  which  said  Company  shall  begin  busi- 
ness shall  be  dollars. 

Fifth. —  The  principal  business  office  of  the  Company  shall  be 
located  in  the 

Sixth. — The  duration  of  the  corporation  shall  be  perpetual. 

Seventh. — The  number  of  Directors  of  said  Corporation  shall 
be  (not  less  than  five)  all  of  whom  shall  be  stockholders. 

Eighth. — The  names  and  post  office  addresses  of  the  subscribers 
to  this  certificate,  and  the  number  of  shares  of  stock  which  each 
agrees  to  take  in  said  corporation  are  as  follows : 

^ames  Post  Office  Addresses  ^No.  of  Shares 


m  WITNESS  WHEKEOF  we  have  made,  signed  and  ac- 
knowledged this  certificate  in  duplicate  this  day  of 
1913. 

(Acknowledgments.) 


